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Posts: 346
| By this spring or middle of this coming season, I wish to purchase a new Patriot (not positive on exact model). But, I need a little financial advice first. This post is pretty off topic and I apologize, but I know we've got quite a few smart, trustworthy folks here who could lead me in the right direction, and I don't know of anywhere else to obtain the proper knowledge.
A little background info: I just turned 18 and live on my own. I have roughly $1,500 worth of bills a month. I work 3 quality jobs and make about about $3,000 a month on average, (after taxes) depending on how many hours I put in. That gives me quite a bit of money to invest with. What I want to do is put a specific amount of money away each and every month for retirement, (I cannot invest in one of my employers 401k plan until I'm 21). The rest of my earnings I wish to invest in a more agressive manner, possibly stocks, property, etc. This money would go to a new boat, finishing college eventually, etc.
So, what I would like to ask of you guys:
1) What would be your choice(s) for long term investments?
2) How would you invest the rest of the money?
3) Where and how would I go about educating myself on general financial investments?
Keep in mind I don't have very much knowledge of mutual funds, trading stock, bonds, etc (thats why I'm asking these questions).
I really appreciate the help guys,
MJB | |
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Posts: 3240
Location: Racine, Wi | MJB, You can try out this fund. I have made tons off of this with hardly any investment. It is called "The New Tuffy For Joel Fund"  You may not get rich off of this fund, but it has been a steady producer for me. 
On a more serious note, you may want to sit down with a financial planner to get some advice on your personal situation and goals. I'm sure if you do a search on the web on investments, you should find some good info.
I know this isn't much help, but it's a start.
Good lungen,
Joel | |
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Posts: 5874
| One of the best investments you can make is to become a homeowner. Are you in the area where you plan on staying? Even short term, owning as opposed to renting is a sound strategy, and you don't have to start out with a new or big house. Find one that needs a little work or remodeling, and you will have almost instant equity. Not sure why you can't get in on the 401K deal at work. You should be able to start an IRA, and can do that with stocks or funds. Take Tuffy1's suggestion, and seek out a financial advisor. You bank may be a good place to start. Good luck. See Steve Worrall for financial considerations on your Patriot. | |
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Posts: 229
| I would recommend going to a financial advisor if I were you. Given your lack of knowledge it might be the best place to start. One drawback from using a financial advisor or broker is you will have to pay fees etc even for investing in a mutual fund. I know a lot of brokerage houses often times offer free seminars in the evenings. Another thing I would recommend is going to the library and read financial publications such as Money Magazine, Smart Money,etc. They usaully are a good source of information, not only for investing, but for financial stuff in general. Once you get more confortable you can start looking at things like Morningstar, S&P Reports, Valueline, etc. and start to get investment ideas yourself. Once you can start you 401(k) contributions max it out.Hope this helps.
Andy
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Posts: 1916
Location: Greenfield, WI | At your age your investment should be aggressive, you don't need the money for over 40 years. You are new at this investing for the future, get a seasoned financial adviser who's firm will be around in 40 years, not somebody like your uncle or a neighbors friend.
Your investing should be in stocks or at least stock based mutual funds. The rate of return over the long run far exceeds any other legal options.
You appear to be far wiser than your years would indicate, in that you are serious about this investing program. Congratulations.
A couple of guidelines that I have used over the years are:
1) know your investments. Don't invest in companies unless you can explain what they actually do in under 30 seconds;
2) Invest in companies with some aspect of "pizazz", which means is that they provide goods or services which someone would actually need;
3) Diversify your investments, "don't put all your eggs in one basket". Don't invest only in one family of stock such as technology, or only retail.
Even during these underperforming last couple of years my rate of return has been double digit. Expect 10% per year in general over the long haul
in stocks, that should be exceeded more often than not.
The compounding of interest over this many years and regular deposits, will easily make you a millionare by retirement age.
Mutual Funds reduce risks of investing in individual stocks, but it also reduces the upside potential, so I strongly recommend stocks.
Edited by Steve Van Lieshout 1/8/2004 8:56 AM
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Posts: 15
| At your age,with that kind of cash, Roth IRA's would set you up for a future where your only concerns would be where to holster the club to wield off gold diggin' hoes and low rent musky hounds. One other consideration is some lakefront/recreation property of which you can use your whole life and as the last twenty years bear out, is an awsome investment. | |
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Location: Minneapolis, MN | The advise above about buying a home is the best advise you could get. Get a couple roommates if you need to. That home deduction on your taxes is the only good thing the government hasn't taken away from us and will help you offset any gains you might make on aggressive investments. | |
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Posts: 1936
Location: Eau Claire, WI | Financial Planning:
Form a relationship with a financial planner that you #1 like and trust, #2 is experienced with references, #3 understands your needs.
When it comes to investing regardless of your age make sure you are comfortable with the agressive nature in which you choose to invest.
On a scale of 1 to 10...
1. = bury it in a mayonase jar in the back yard.
10. = ah heck it's only money.
Your answer to this will be dertermined by a variety of factors, personality, age, knowledge/wisdom as you get older.
Most importantly make sure your financial advisor/investor understands where you stand on the 1-10 scale so he/she came make suggestions based on your comfort zone.
I agree with Shep on the real estate issue. Typically unless the neighborhood really goes to pot real estate usually is a wise investment and sweat equity will pay dividends.
One thing to remember:
A boat, truck or any other luxery item is generally not an investment from a monetary standpoint. You can purchase a new boat or truck today and park it in your driveway and never use it and every day it looses value due to age depreciation.
Good luck to you in your future... | |
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Posts: 202
Location: Angola, IN | I'm just a young buck myself, 28 years old, but when I got out of college and got a good job, I was serious about saving money too and I did a lot of research. For long term investments, you can't beat a Roth IRA...especially since you're so young. I think the max is only $2500 a year, but you can still put that $2500 in for 2003. You have a few more months to do that. Then put another $2500 in for 2004. If you talk to a financial planner, they can make automatic deductions out of your checking account every month. With a 401k, you put pre-tax money in, but it doesn't get taxed until you take it out. So if you put in $300 a month in a 401k or traditional IRA, it will only cut your take home by by approximately $225, because if you didn't contribute that $300 towards the 401k or traditional IRA, you'd get the $300 in your paycheck, but you'd be taxed on it, resulting in approx. $225 more per paycheck. I hope that makes sense. With a Roth IRA, you put after-tax dollars in the account. So if you put $300 in a month, it's really costing you $300 a month. However, as the money grows and as compound earnings are realized, the money is all yours. You don't have to pay taxes on it when you take it out. In a traditional IRA or 401k, when you're 65 and have $1,000,000 in your account, it's really only worth approx. $700,000 because when you take the money out, you'll have to pay some serious taxes on it. However, with a Roth, it costs you a little more now, but when you're 65 and your Roth is worth $1,000,000....it's all yours. The government doesn't take it's share. With a Roth, you can invest in nearly anything you want: stocks, bonds, mutual funds, etc. I'd hire a financial planner and be really aggressive early on. You have nothing to loose and you're years from needing the money. If you do it right, it's not a big deal to make a pile of money. | |
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Posts: 194
Location: Lincolnshire, IL | I can only assume that with $1500 in bills per month you already have a house, if this money is being spent on a vehicle payments, rent and credit card bills, pay off your credit cards, downgrade your vehicle give your landlord notice and Buy a House, Buy a House, Buy a House, interests rates are way Low. Pay your mortgage not someone elses... put all your money toward a house and wait until your 21 to buy into your company's 401K, and then put everything in that and your house...buy a used boat..used car...used everything at your age. keep your bills to a minimum and buy a house. You will thank us when your 30 and way ahead of all your peers. Personally, there are so many resources on the web and in book form that I feel financial advisors aren't worth the money. | |
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Posts: 1916
Location: Greenfield, WI | Buying a house now is good advise, especially if you do this other investing as well. The equity in a home is usable in obtaining loans and there are tax benefits, but in general home equity is only available at the time which it is sold, which much of that is either taxable or must be rolled into another residence. Unless your last name is Clampet (from the Beverly Hillbillies fame), it is not likely that you will be a millionare from owning a home. Waiting 10 or 20 years to start investing for retirement has an incredible negative effect on the total funds available at retirement. When you interview a potential financial adviser, have them plug actual numbers into the compounding of value in the later years to prove this point.
The Roth program is a great piece of advise which I had forgot about. You will not pay taxes at the time of withdrawals. Start your program now and stick with it.
Edited by Steve Van Lieshout 1/8/2004 10:00 AM
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Posts: 1310
Location: Washington, PA | I am a financial advisor. The roth is a great idea. Your money grows tax FREE. Also, you can take the money out for a first time home purchase, and if you take it out for a boat (after 5 years), you are only taxed 10% of what you earned. BTW, you can now put $3,000/year into a roth. As far as specific investments, for that small amount of money, look to mutual funds, there are a lot of good ones out there.
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Posts: 208
Location: Downers Grove, IL | All great advice. Here's my two cents...
You can very easily get into stocks with some professional help by investing in mutual funds, where a professional fund manager chooses, buys and sells several stocks for you. The best way, IMHO, is to contribute a fixed amount on a monthly basis which is automatically deducted from your checking or savings account. This is known as dollar cost averaging. The nice thing is that by setting a fixed amount, say $200 per month, you are always buying the fund shares with "right". If the price of a fund share is up, you will automatically buy less shares. If the price is down, your $200 will go to buying more shares. Mutual funds also keep your money diversified. This is extremely important, as mentioned.
I have been doing this for years over several funds and like long term fixed investing strategy, after a short time, you forget that you're investing.
The Roth IRA is also a great tool - no tax burden; you can also withdraw your principal (not your gains) anytime without penalty. In 2004 (and 2003, which you can contribute until 4/15/04), you can contribute up to $3000 per year. So say, you contribute $3000 in 2003 and 2004; in 2005, you can take that $6000 out WITHOUT being penalized. . And when you reach 59.5 years and want to start withdrawing your contributions and earned interest - it is all of your money. Roth contributions can also be taken directly from your checking or savings account, so if you don't have the entire $3000 to contribute in one lump sum, you can spread it out.
At 18 years old, you do the math, with conservative growth year to year and you're looking at a BIG nut.
Good luck! | |
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Posts: 346
| Once again guys, I really appreciate all of the information you have shared with me. The $1,500 worth off bills each month is everything that I HAVE to pay for each month. Car payment, insurance, rent (that alone is $250 for a 4 door sedan, with NO traffic violations), extended warranty, rent, food (I eat a ton), housewares, etc. It all adds up. Keep all the posts coming!
Thanks,
MJB | |
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Posts: 392
Location: KY | MJB
Excellent questions, I wish I were in your shoes 19 years ago. I recommend Dave Ramsey's program “financial peace” I think you can find his web site at www.daveramsey.com. His approach is strait forward and easy for anyone to understand. It will give you a good fundamental understanding of how to manage your finances. It is not a get rich quick program. In his words “he sells crock pots not microwaves”. At your age you are so far ahead of most people. If you invest carefully now in Roth IRA’s, mutual funds, etc you will be a multi millionaire easy by the time your 50. (Not 65)
Stay away from stocks unless you really know what you are doing.
You won’t like this advice, but you asked. Wait until you can pay cash for your first boat. Or buy a lesser boat that you can pay for now.
BruceKY
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Posts: 194
Location: Lincolnshire, IL | Oh yeah, add one more expense, buy Quicken and track EVERYTHING, pretty soon those expenses that seem to be necessary look unnecessary on paper. Learn from my mistakes and others from when we were younger....another Personal opinion, paying for extended warranties is wasted money. | |
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Posts: 326
Location: Plainfield IL | I agree with all of the above. I would also hold out and buy a rig you can pay cash for. First boat I bought out of college with my brother we paid cash, sold it and bought another for cash. Best part about a used boat is the the original owner ate most of the depreciation. If you do become strapped for cash with a new boat and want to sell, you will most likely owe more than its worth. There are a ton of good deals on nice rigs 3-5 years of age that can be had for a good price. | |
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Need advice on future investments.